Virus fear and logistical challenges curtailing economic activity in Delhi-NCR, new survey shows

As India’s economy limps back to life, combating pandemic fears and fixing transport and logistical challenges may be key to a sustained recovery, data from a fresh survey conducted by the National Council of Applied Economic Research (NCAER) in the Delhi-NCR (National Capital Region) suggests.

The fear of covid-19 was the single-biggest factor hindering resumption of normal work routines for farmers, salaried workers, and small businesses. For daily wage labourers, lack of work was a bigger concern, the survey conducted by the NCAER National Data Innovation Centre (NDIC) shows.

The latest round of the Delhi NCR Coronavirus Telephone Survey (DCVTS) was conducted between 15-23 June, and involved telephonic interviews with 3,466 households spread across 12 districts of the Delhi-NCR region. This was the third such survey to be undertaken by NCAER NDIC in recent months and covered respondents from the states of Delhi, Haryana, Uttar Pradesh, and Rajasthan belonging to the NCR region. Half of the respondents were from villages and the rest from urban areas.

The survey shows that economic conditions are tepid for many workers and small businesses. Businesses are unable to find enough customers, and workers are finding it hard to get work. Further, the fear of contracting coronavirus stops many employers from calling back their employees even as it creates doubt and fear among employees. The absence of public transport has been another big challenge in getting back to work.

The DCVTS survey shows that the pandemic-induced lockdown hit economic activities hard but the impact was unequal. Daily labourers were hit the hardest by the lockdown, and their work participation rates dropped sharply in the April-May period before recovering partly in June, although it still remains far below pre-lockdown levels. Small businesses and salaried workers also took a hit and have seen only a partial return to economic activities.

The silver lining in this grim picture is that despite some disruption, most farmers continued to harvest the rabi crops and prepare for kharif. Hence, agricultural labourers were less affected compared to other daily wage workers.

During the lockdown phase (April-May), 44% of regular salaried employees were able to continue in their jobs. Among regular employees, public sector workers were the most privileged, with 92% of them continuing to receive their salaries. In contrast, only 54% of the private sector workers received any salary during the lockdown.

For households owning small businesses, the lockdown posed an existential challenge. More than half suspended their activities in the April-May period and 12% shut shop permanently. The businesses that stayed open faced substantial challenges in obtaining inputs as well as in finding consumers.

Despite considerable relaxation in lockdown restrictions since early June, 76% of the household businesses that were open in March were functioning by mid-June.

Daily wage labourers were the most disadvantaged during the lockdown and have found it hardest to find work now. Two thirds were unable to work at all during the lockdown and the rest found work for some days and not others. Less than 3% of the wage labourers found work on most days during the April-May period.

The loss of work was particularly high for casual labourers in construction or other manual work, and somewhat lower for agricultural labourers. By June, only 62% of casual labourers were able to return to work and half of this group noted that although they found work, it was with great difficulty.

These diverse experiences are reflected in concrete markers of distress captured in the DCVTS-III survey. The share of the hungry and indebted were relatively higher among daily wage labourers and small business owners, the data shows. Farmers and salaried workers reported relatively lower distress in the Delhi-NCR region.

The government’s response to such distress has largely centred around in-kind and cash transfers. For instance, allocation of cereals and pulses through the food distribution system were raised and cash transfers were made to the bank accounts of Jan Dhan Yojana (JDY) beneficiaries. Daily wage labourers, hit the hardest by the lockdown, were able to get some of these benefits soon after they were announced in the region surveyed although these benefits remain modest in size.

As the economy unlocks further, it is important to ease the logistical challenges faced by farmers, small businesses, and workers in moving goods, finding jobs, and in reaching their workplaces. Social distancing norms have restricted access to informal recruitment spots on major junctions. Hence, alternative mechanisms for matching workers and jobs, perhaps using e-portals, may be needed to facilitate work for daily wage labourers. More importantly, social distancing measures in bazaars, buses, and trains will need to be strictly enforced to ensure that workers can travel to work, and businesses can operate, without fear of contracting the virus. Finally, the most effective way to deal with the fear factor will be to get a better handle on the pandemic, which is yet to peak in the country.

Sonalde Desai is professor at the University of Maryland and director, NCAER NDIC. Santanu Pramanik is senior fellow & deputy director, NCAER NDIC. The analysis and interpretations offered here are those of the authors alone.